Light in the darkness: understanding the future directions of organizational corruption.

Author:Nakahara, Sho
Position:Abstract
 
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INTRODUCTION

With the arrival of the 2000s, research on organizational corruption started to attract attention in the United States. In particular, serious cases such as the failure of WorldCom, concealment of income by Enron, and fraudulent accounting by Arthur Andersen, in 2001, as well as the failure of Lehman Brothers in 2008, invited considerable attention in the United States. The Academy of Management has been promoting academic conferences given the social influence of organizational corruption, and held a special symposium in 2002 and a special topic forum in 2008.

As mentioned below, the existing research on organizational corruption can be divided into research specifying the factors that contribute to organizational corruption and research on controlling organizational corruption. The former focuses on the behaviors of individuals and groups as well as on organizational cultures and norms to specify contributing factors, whereas the latter addresses how to prevent organizational corruption, with a focus on constructing models to control it.

This study reviews the existing research on organizational corruption and presents directions for future research in Japan. It examines existing research on organizational corruption to determine which discussions are necessary in Japan by reviewing research on organizational corruption from the United States.

CURRENT STATUS OF RESEARCH ON ORGANIZATIONAL CORRUPTION

Analytical views of research on organizational corruption

This section first explains the analytical views of existing research on organizational corruption in the context that research on organizational corruption has addressed this subject multilaterally. (2) In the explanation, analytical views are presented with reference to Ashforth, Gioia, Robinson, and Trevino (2008) and Fukuhara and Chae (2012). To date, research on organizational corruption has focused mainly on five analytical views (Ashforth et al., 2008: Fukuhara and Chae, 2012): the (1) micro, (2) macro, (3) wide, (4) long, and (5) deep views.

First, let us examine the micro view. The micro view identifies the behaviors of individuals and organizations as factors that contribute to organizational corruption, and it has become a focus of research with the help of such concepts as antisocial, deviant, and counterproductive behaviors (Robinson and Greenberg, 1998). As a result, the micro view explores how organizational cultures and norms cause organizational corruption (e.g., Anand, Ashforth, and Joshi, 2005; Beenen and Pinto, 2008; Bell, 2009; Lange, 2008; Pinto, Leana, and Pil, 2003). For example, the literal translation of "bad apples," which Ashforth et al. (2008) used as the subtitle in the text on the micro approach, is "rotten apples." This reasoning comes from an English proverb stating that "bad apples spoil the barrel," meaning that corrupt behavior exhibited by individuals (bad apples) inside an organization corrupts (spoils) the entire organization (the barrel) and that the corruption (spoiling) of an entire organization (the barrel) occurs in an organization in which individuals or groups exhibit corrupt behavior.

Next, the macro view is discussed. Unlike the micro view, which analyzes the occurrence of organizational corruption on the individual and collective levels, the macro view analyzes how formal and informal systems cause organizational corruption in an entire organization and industry, and deals with organizational corruption as an ethical issue. As in the case of the micro view, the literal translation of what Ashforth et al. (2008) called "bad barrels" is "rotten barrels." That is, the term, "rotten barrels" means that individuals who internalize the culture and rules of an organization will engage in organizational corruption when the entire organization is corrupt.

The wide view analyzes organizational corruption as a system. Analyzing organizational corruption as a system refers to the concept that the demand side, which offers benefits, and the supply side, which receives benefits, cause corruption when they form a joint system.

The long view analyzes how organizational corruption has been regulated historically. It analyzes organizational corruption and regulations by examining what regulations have been used to control organizational corruption in the past and whether they have occasionally generated harmful consequences. It is generally accepted that organizational corruption should be controlled by regulations. However, some research indicates that imposing regulations is detrimental because when this is done, employees are subject to excessive pressure from outside the organization, which impairs their motivation and autonomy (Fukuhara and Chae, 2012).

The deep view conducts theoretical research into organizational corruption, such as comparative examinations of research on organizational corruption and the integration of analytical views. Various disciplines, such as economics, sociology, psychology, social psychology, and criminology, are used as analytical tools in research on organizational corruption. This causes discussions to be unfocused because researchers from diverse disciplines are conducting this research. At the same time, as shown in this paper, it is necessary to identify methodological problems in existing research. It is the objective of the deep view to examine these problems critically.

The next section analyzes existing research with the help of these five views. First, existing research is classified into research that specifies contributing factors and research focusing on controlling these factors. In the former type of research, the micro, macro, and wide views are reviewed. Because these three views examine organizational corruption exhibited by individuals, groups, and systems, the author decided to use these three views as research subjects to identify contributing factors. In the latter type of research, the long view and control perspective are reviewed because both are applicable to this research: the long view discusses regulations for organizational corruption and the control perspective focuses on measures to deter organizational corruption. The author decided to analyze these two views in research on deterrence. The deep view is not discussed in this paper, but it is an important perspective that should be examined in future research on organizational corruption.

Research to specify contributing factors

Here, research aimed at specifying contributing factors is reviewed. As mentioned above, the micro, macro, and wide views are discussed. The author examines the discussions in the existing research by considering these three views.

Research on the micro view

First, the micro view is examined. In the micro view, individual and collective behaviors are specified as factors that contribute to organizational corruption. For example, Pinto et al. (2003) analyzed the micro view by using the concept of organizations of corrupt individuals (OCI), which views an organization as a group of individuals who engage in corruption. According to Pinto et al. (2003), the OCI concept attributes the occurrence of organizational corruption to individuals and uses an organization...

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